A Wellness Stipend Guide For Employee-First Companies
A wellness stipend is a great way to care for employees and bolster your employer brand. Here's everything you need to know.
Our 2023 Benepass Benefits Benchmarking Guide reveals insights on top pre-tax and perks programs, average stipend contributions, and benefits design so you can design more competitive benefits.Get the guide
There are few positives to come out of the global pandemic, but increased awareness of employees’ health and well-being is one of them. The global health crisis forced HR leaders to become overnight experts in psychological health and find creative ways to support their workforce, both inside and outside of the office.
The result? Employers now demonstrate commitment to their employees by offering wellness stipends as part of their benefits package. These are taxable benefits paid to employees to cover healthy living and wellness-related expenses. Some employers provide lifestyle spending accounts or wellness reimbursement plans to fund this benefit type, separate from health benefits. In either case, the aim of this allowance is to provide an assortment of physical and mental health initiatives that support each employee’s unique wellness journey at any stage in their life and career.
This guide outlines the main benefits of investing in wellness programs, what to include in your wellness stipend, and how to design a successful program that supports your entire workforce.
Offering wellness reimbursement or stipend plans boosts the chance that your employees are holistically healthy. Expect the following benefits when all four quadrants of physical, mental, social, and financial health are in perfect harmony:
72% of employers recognize that stress and burnout are current concerns for their organization due to the aftermath of the pandemic, societal unrest, political polarization, climate change, macroeconomic conditions, and more.
Companies offering wellness stipends support their employees in handling these large-scale threats and enable them to access services or activities important to their physical and mental well-being. A well-rounded package will include access to fitness services; this is important because studies find that exercise improves self-esteem and cognitive function.
A recent MetLife study found that holistically healthy employees are 74% more likely to be satisfied with their current job, 59% more likely to feel engaged, and 53% more likely to be productive. Nadia Harris, Founder of Remote Work Advocate, explains that building a supportive workplace that focuses on well-being isn’t rocket science — it’s about listening to what employees need:
“It’s not a modern office or free Friday cocktails that improve productivity, engagement, and retention. Just provide people with workplace flexibility and care about their everyday needs. That’s how you’ll build a genuine company culture everyone will commit to.”
The U.S. workforce has an increasing absenteeism problem. BLS data reveals that 7.8 million workers experienced an illness-related absence from work in January 2022, up 110% from 3.7 million in the year prior. Employees who are supported holistically are 74% more likely to be resilient, meaning they’ll bounce back from minor illnesses and take fewer unplanned days off.
An attractive wellness stipend has the power to attract and retain top talent. Kelly Tucker, Managing Director of HR Star, breaks down how the recruitment landscape has changed to match employee demand.
“Anyone working in recruitment will tell you that people’s expectations have massively changed. If you’re not an employer being transparent about looking after your people, you will not be able to attract and retain the best. People have a basic expectation that their employer will care about and have access to platforms that enable them to be well.”
This is an initiative that will pay off in the long term. MetLife confirms that 51% of holistically supported employees are more likely to still be with their organization in 12 months, saving your business thousands of dollars in recruitment costs.
Tailor your wellness stipend program to your company culture and the needs of your employees by adding some of these popular stipends to your package.
Physical health and exercise benefits can be something other than the on-site corporate gym memberships you’d associate with enterprise employers. A modern-day fitness allowance includes access to:
Example: Crisis Text Line worked closely with Benepass to develop a mental and physical health perks program, including meditation apps, fitness memberships, and athletic apparel.
Ensure your employees feel mentally balanced both inside and outside of work. Some of the following benefits will proactively protect psychological health, while others should be available when employees require extra support or are going through a crisis.
Example: Mindbody has built a wellness perk program called Be Well, which includes extensive mental health support such as therapy and counseling, apps, coaching, and relationship therapy.
Support your employees in maintaining a healthy weight and following a nutritious diet. Motivate them to ditch the traditional office lifestyle of take-out breakfasts and lunches, opting instead for fresher options:
Example: Moderna partnered with Benepass to add healthy home food delivery as an eligible expense under its Lifestyle Spending Account program after running an employee feedback survey.
Encourage your employees to focus on healing their bodies and minds through alternative therapies. Consider adding some of the following to your stipend:
Example: Seres Therapeutics worked with Benepass to personalize its perks program, adding a spa, beauty, and massage category alongside other mental health and nutritional wellness options. Matt Sanborn, Senior Manager of Benefits, explains:
“People love having massages. That’s always something you want to get for yourself, but at the same time, you’re like, ‘Is that the best use of my money?’ When you have this bucket carved out that’s supposed to be used for things like that, people are more apt to do that.”
Financial insecurity is a significant source of stress. Many employees find it hard to concentrate on their daily work when living paycheck to paycheck, struggling to pay the bills, and feeling anxious about affording a comfortable retirement. Your financial wellness stipend might include:
Example: Bright Health recently expanded its BrighterHealth benefits offering to include student debt repayments at no extra cost to the company.
There’s no one-size-fits-all approach to creating a wellness stipend. But there are some sensible steps you can take to develop a program that works for your employees’ evolving needs.
Recognize your employees as individuals. Understand that your workforce includes people of different races, genders, backgrounds, pay levels, family situations, and health requirements. Rather than prescribing set perks across the board, empower your employees by giving them access to the specific wellness benefit expenses they need.
Example: A new Bright Minds Wellness Barometer study confirms that 92% of employees feel stressed about their finances. 64% of workers state this stress has impacted their relationships, and three-quarters have passed up social opportunities.
Benefits make up around one-third of the average employee compensation package. Within this bucket, determine how much to set aside specifically for wellness compared to health insurance, retirement planning, and mandatory benefits.
Consider the following as part of your budget:
Your goals should be both ambitious and achievable while in alignment with your company values. For example, your goals might be:
Use the SMART method to build your wellness stipend goals, ensuring they’re Specific, Measurable, Attainable, Relevant, and Timely.
If recruitment and retention are two of your top priorities, it’s essential to check out what competitor employers are offering.
Our Benepass Benefits Benchmarking Guide takes the legwork out of the research. Download it to understand how companies approach wellness stipends. The guide includes a deep dive into the following industries:
Personalization is a strong theme in the current benefits space. You can’t expect a 59-year-old male approaching retirement to have the same wellness experience as a 29-year-old female keen to start a family.
Ensure your program is accessible and inclusive to all by providing flexibility in your benefits package. Wellness spending accounts are key to improving employee wellness by offering eligible expense categories covering a range of physical and psychological health activities. Employees can choose the wellness benefits that make the most sense to them.
Review the delivery of your benefits, and check that your employees understand how your wellness stipend works and the value it provides. Explain your program’s tax implications, and ensure they know how to access additional information if needed.
Finally, communicate the importance of wellness and the resources available to employees. This will motivate your employees to take advantage of their benefits, ultimately improving employee engagement and satisfaction.
It’s not uncommon to hit roadblocks when rolling out a wellness program. Here are some common challenges you may encounter, with tips on course-correcting your strategy.
Health and wellness stipends aren’t a standalone tool you can use to overhaul employee well-being. Gareth Fryer, Co-CEO of HR company Fika, explains that the foundations of a healthy workplace must be there for your wellness initiatives to be effective:
“An organization’s duty of care starts with addressing root causes of declining well-being in the workplace. The key thing is that a positive impact for every employee at work can be made by the environment, the structures, the culture, the reward systems.”
Prioritizing well-being initiatives should be embedded into the core of your business practices. Use your wellness stipend to incentivize the desired behavior change as needed.
Employees don’t always make use of eligible benefits, especially if they don’t believe they’re relevant to them. Communication can be an issue here if employees don’t know how to access the benefits, or if the platform is too complicated to use.
Another problem occurs when companies are guilty of wellness washing — the practice of appearing to care about employee well-being without actually caring. In a UK survey of 1,000 employees, 71% of companies celebrated mental health awareness days, but only 36% boasted “good” or “outstanding” psychological well-being support as voted by employees.
“One of the most important points is to give your employees the time to take part in whatever new wellness programs you bring in — and that doesn’t mean during their lunch break. Start fostering a culture of well-being in the organization with dedicated time for your teams to take care of themselves.”
Your wellness program must be forward-facing, focused on the future of employee well-being, and shareable with employees. “Having a clear comms roadmap that includes benchmarking and progress measurement from the outset is essential,” says Caroline Ferguson, Organizational Mindset Specialist for Mindsetter Ltd.
Regularly evaluating the program’s overall success is also essential to measure long-term ROI. Collect employee feedback to understand the effectiveness of your program on engagement, productivity, and your overall health and wellness culture.
Cutbacks, inflation, and the overall economy are all top of mind for companies, which can cause problems when budgeting for a wellness program. This is a problem that resonates with Isaac Robertson, Co-Founder of Total Shape, who told us:
“One of the challenges we faced was ensuring that the healthcare stipend program was sustainable and financially feasible for our company. We worked closely with our HR and finance teams to find a balance between offering generous benefits and keeping costs under control.”
Remember that benefits budgeting is never a one-time task but something to revisit throughout the year. Keep checking in with your employees to determine the return on your investment, measure progress toward your benefits goals, and benchmark your program against competitors.
Pro tip: By opting for a flexible stipend account, you’ll stretch your benefit dollars further. You can consolidate various existing wellness programs under one account to save time and budget. Allowing employees to spend on a wide variety of wellness expenses also makes these accounts feel like 10 benefits (or however many categories you allow) in one.
Wellness stipends are a flexible way to care for your employees’ health and well-being. By doing so, you're supporting your individual workers and setting your business up for success by creating an environment where they’ll thrive.
Benepass makes it easy to nurture a supportive culture with our stress-free benefits platform. Implement your well-being program and give employees access to numerous categories to cover their personalized wellness expenses. Most companies choose to set up a wellness stipend through a taxable lifestyle spending account that Benepass can create in four easy steps:
Ready to give employee health and wellness a much-needed boost? Book a demo of Benepass today or contact firstname.lastname@example.org for more details. Read up on other stipends that can complement a WFH stipend and further support employee well-being: